Philippine publicly-listed holding company Filinvest Development Corporation (FDC) returned to the US dollar bond market after an absence of more than seven years, pricing on September 10 a US$200 million offering.
The unrated Reg S only five-year deal was priced at 99.442% with a coupon of 4.125% to offer a yield of 4.25%. This was 25bp tighter than the initial price guidance and the coupon represents the lowest ever for FDC in the international bond markets.
“This bond issuance will further optimize our capital structure, as well as position us to pursue new investments in infrastructure and sustainable solutions such as solar energy, water and waste water,” says FDC president and chief executive officer Josephine Gotianun Yap.
Proceeds from the bond offering, issued through Filinvest Development Cayman Islands, will be used to finance capital expenditure in digitalization, water, desalination, waster water and renewable energy projects, the district cooling system joint venture, and other infrastructure projects, as well as to refinance some maturing loans. They will also be allocated for general corporate purposes.
“The issuance will allow us to diversify our funding sources, partially refinance existing debt, and give us flexibility in managing our maturity profile,” adds FDC CEO Nelson Bona.
UBS was the sole global coordinator for the transaction, as well as a joint bookrunner along with Standard Chartered. China Bank Capital Corporation, Metropolitan Bank & Trust Company, PNB Capital and Investment Corporation and UnionBank of the Philippines acted as the domestic lead managers.
FDC announced during its online annual stockholders’ meeting on June 22 this year that it was exploring tapping the offshore debt market through the issuance of long-term bonds given the prevailing attractive offshore debt environment to further bolster its liquidity position. The company debuted in the offshore bond market in March 2013, raising US$300 million. The seven-year deal was priced at par with a coupon of 4.25% and it attracted a total order book of US$1.4 billion from 70 accounts. FDC has retired the bonds using the group’s excess cash, coupled with new local currency term loan financing from the local banks.
The company has earmarked 25.7 billion pesos (US$530 million) for capital expenditures in 2020. It has been building up its third leg in the stable power generation business, with the 405MW circulating fluidized bed plant of its subsidiary FDC Utilities located in the province of Misamis Oriental. This is the largest operating baseload power plant in Mindanao, which is outpacing the other regions in terms of power demand.
FDC’s environment-friendly solutions portfolio includes joint ventures with technology leaders such as Engie Services Philippines for solar rooftop systems and district cooling services.